What exactly is NAFTA?

1 Answer

The North American Free Trade Agreement, an international treaty, was adopted in 1994 by the U.S., Mexico, and Canada. It created the world’s largest free-trade zone, with a combined population of almost 400 million and more than $6 trillion in combined gross domestic product. U.S. approval came only after a bitter congressional debate that pitted most U.S. business interests—which saw the treaty as a way to expand markets—against unions and environmentalists, who feared that NAFTA would depress U.S. wages and lower environmental standards. To address those concerns, two “side agreements” were aimed at ensuring that U.S. and Canadian companies would not adopt Mexico’s looser pollution and labor standards to remain competitive. How does NAFTA work? It eliminates tariffs—surcharges that make imported goods more expensive than their domestic counterparts—on more than 70 percent of the products and services that the U.S., Mexico, and Canada sell one another. Before NAFTA, for example, Mexi